Indian Autos 1QFY27 preview: cost inflation expected

Research evidence excerpt

Indian Autos 1QFY27 preview: cost inflation expected

7 July 2026

Indian Autos EquitiesAutomobiles

1QFY27 preview: cost inflation expected India

◆ Strong demand momentum continued across segments in Yogesh Aggarwal*

1Q27, despite price hikes and fuel inflation Head of Research, India HSBC Securities and Capital Markets (India) Private

Limited

◆ We expect RM cost inflation to adversely impact margins by yogeshaggarwal@hsbc.co.in

+91 22 2268 1246

100-250bp in 1Q, which may not come as a surprise

Vipul Agrawal*, CFA

Analyst, India Automotive

◆ Positively, RM costs started to ease towards the end of June; HSBC Securities and Capital Markets (India) Private

and OEMs have taken price hikes recently; we update our TPs vipul.agrawal@hsbc.co.in

+91 97690 51842

Significant impact of commodity cost headwinds in 1Q, but not a surprise: We Ayush Jhunjhunwala*

expect EBITDA margins to decline, sequentially, by 100-200bp for PV OEMs, 300-500bp Analyst, Autos and Auto Ancillary HSBC Securities and Capital Markets (India) Private

for CV OEMs and c450bp for pure e2W OEMs. For 2W OEMs, the c200bp impact may Limited

ayush.jhunjhunwala@hsbc.co.in

be partially offset by higher exports (mainly Bajaj and TVS) as the INR depreciated c4% +91 22 40891378

q-o-q against the USD. 1Q27 expectations and moving parts are shown in Exhibits 3-7.

Commodity cost index: The 2Ws commodity index was up 16% q-o-q in 4QFY26 and * Employed by a non-US affiliate of HSBC Securities (USA) Inc,

and is not registered/ qualified pursuant to FINRA regulationsup c8% q-o-q in 1QFY27, implying a 200-250bp adverse impact on gross margins. The

e2Ws commodity index was up c16% in 4QFY26 and up by c11% q-o-q in 1QFY27,

implying a 300-350bp adverse impact on gross margins. The 4Ws commodity index was